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Budget 2021 & Housing Associations: The Impact

budget 2021 housing

Last week Chancellor, Rishi Sunak unveiled this year’s Budget, which as expected centred around economic recovery as we try and escape the pandemic. Covid-19 has clearly caused a dramatic shock to the economy so there was a lot of anticipation about what Sunak would announce to start the long road back to prosperity.

Here we will look at the Budget from the perspective of housing associations, the potential changes the announcement could lead to in the future, and how it will impact the entire housing industry in the short term.

Let’s look at each aspect of the budget that could impact the housing industry in turn.

The Stamp Duty holiday extension

Back in July Chancellor, Rishi Sunak announced that the Stamp Duty threshold would increase from £125,000 to £500,000, until 31st March 2021. He has now extended this by three months which will benefit home movers and first time buyers looking to move in the short term future.

For housing association tenants looking to move from social housing to buying their own homes this may be of benefit, however even before the Stamp Duty extension there was no tax to pay on homes under £125,000.

Guarantees for 5% mortgages

In another boost to all types of home buyer, the Chancellor announced that the government will guarantee mortgages for buyers who can come up with a 5% deposit. This scheme will launch in April and most major lenders have signed up to be part of it.

Again, this could potentially benefit those tenants looking to buy but with a limited deposit available.

Mark Perry, chief executive of housing association Vivid Homes, said: “Both the Stamp Duty extension and mortgage guarantee scheme will be welcomed by many, but what we really need in this country is increased funding to support the building of more affordable housing.”

£20 per week uplift in Universal Credit

For many housing associations, senior industry figures, and tenants themselves, the £20 per week uplift in Universal Credit will come as very welcome news as many people struggle to make ends meet during the pandemic.

Kate Henderson, Chief Executive of the National Housing Federation, says: “Housing associations see every day how the Universal Credit uplift provides much needed relief for those living on the lowest incomes – so its short-term extension is welcome. This extra £20 a week helps families buy enough food to feed themselves and pay their rent.”

The problem for many may be that this uplift is temporary, it’s in place for six months. Housing association tenants could come to rely on this additional support and struggle when it comes to an end. There’s pressure on the Chancellor from the housing sector to make the uplift a permanent fixture so we will see how this plays out as the pandemic continues to ravage the economy and many household budgets.

In additional shows of support for those on low incomes however, Rishi Sunak did announce Working Tax Credit claimants will get a £500 one-off payment and that the minimum wage is set to increase to £8.91 an hour from April. Both of these schemes will also help a large proportion of housing association tenants.

Extension of furlough

For working housing association tenants who’ve been on furlough, this will come as a big relief and provide a bigger safety net. It was pleasing for many in the housing industry to see that Sunak extended the scheme beyond the planned ending of restrictions in June.

Furlough’s extension until September will give businesses the chance to understand the ongoing impact that the pandemic has had as things get back to normal.

This will prevent mass redundancies due to the ongoing levels of uncertainty employers are facing. All in all, this is therefore a very welcome reprieve for employers and furloughed workers alike.

Extra support for domestic abuse survivors

Extra funding to support survivors of domestic abuse is welcome news for tenants who’ve suffered at the hands of a partner and we’ll look forward to seeing more details on this as they’re published.

As professional mediators, and as we’ve written in previous articles, we’ve seen a huge surge in tenant disputes since the pandemic began, both between neighbours and within households. It’s pleasing to see that more support is on the way for the victims who need it.

New Infrastructure Bank

The new UK Infrastructure Bank announced by the Chancellor will be set up in Leeds. It will have £12bn in capital, with aim of funding £40bn worth of public and private projects.

Many commentators from the housing industry see the sector playing a key role in the economic bounce back and will hope this will help boost housing projects, including the creation of more affordable housing.

Increased investment in apprenticeships and traineeships

This will come as extremely positive news for housing associations who not only help tenants with everything to do with their housing, but also help individual tenants in other areas, such as finding new employment and applying for benefits.

This scheme unveiled by the Chancellor will provide more opportunities for tenants to build a new career and will give housing associations more support to present to tenants who are looking for new opportunities in life.

Overall conclusions

There’s a lot of good news in the Budget for housing associations and tenants alike. However, as some of the positive schemes we’ve looked at here are only temporary, there’s some concern from the housing industry about potential problems many could face when these come to a close, such as when the uplift in Universal Credit ends.

It’s also clear to see that many senior figures in housing expect the sector to play a pivotal role in the wider economic recovery so it’s been important to understand what’s coming following this year’s Budget.

There’s a lot of positives for home buyers with the Stamp Duty holiday extension and the 5% mortgage guarantee scheme, but it’s also acknowledged that private renters have suffered most in the pandemic and many simply won’t have the means to buy a home in the near future.

For those in social housing the Budget provides hope for the future, with the Universal Credit uplift, the extension of furlough, and the new investment into apprenticeships.

This will please housing associations who are keen to support their tenants in all areas. Equally pleasing for housing associations will be schemes such as the new Infrastructure Bank that will support the building of more affordable housing.

Jon Sparkes, chief executive of Crisis, said: “We desperately need more social housing, while a lack of further investment in housing benefit will push more people into poverty and put them at risk of homelessness.”

How ADR is helping housing associations through the pandemic

Housing associations: we hope this has given you all the information you need relating to the Budget 2021, what’s coming, and how the announcement may impact the entire housing industry.

It’s an important time as we move to come out of the pandemic and we know there’s still a lot of challenges on the horizon when it comes to handling tenant complaints and dealing with conflicts.

As a result we’re currently offering a free 1-hour consultation to housing associations to review how you’re currently using mediation services. This will show you how you can use it to get faster, improved results and save a lot of time, money and stress when managing tenant conflicts.

Contact the team today on 01772 954602 or email to find out more or to book your free consultation.

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